Tara Creaven-Capasso of Caduceus Medical Development Ltd discusses key insights for NZ healthtech startups tackling complex regulatory environments.
New Zealand (NZ) has become a breeding ground for innovation because the country fosters the development of dynamic start-ups with international ambitions. Healthtech companies are seeing marked growth. According to the HealthTech Activator’s 2021 Healthtech Sector Update, NZ healthtech business generated an estimated $2.85B in revenues in the 2020-21 financial year, demonstrating a seven-year compound annual growth rate of 13%.
However, despite this strong growth, NZ startups continue to face many regulatory obstacles in the highly competitive global market. Technological innovation is not the only guarantee of a startup’s success. Other factors, such as funding and compliance, are essential and represent many of NZ’s small businesses’ concerns.
Compliance with complex and dynamic regulatory frameworks leads to longer incubation periods required to convert an ‘innovative and promising technology’ to a clinically relevant ‘medical product’. While awareness of the term “Regulations” has grown since my time in NZ, I continually witness companies failing to achieve their commercialisation goals within a satisfactory time frame due to regulatory issues (often referred to as ‘blind-spots’). The main culprits I see creating barriers to market entry (which also negatively impact exit strategy for early investors and shareholders) are:
Startups that operate commercially in the European and U.S. markets must not only deal with a plethora of regulations but they also have to anticipate future changes. Successful innovative startups are knowledgeable of regulatory changes and have ownership of that role clearly defined within their organisation. Being nimble and adaptable to change is essential when realising the return on investment (ROI) of their technology. If requirements are not met within a defined time frame as determined by the regulatory agencies, it could mean the non‐marketability of a product or its withdrawal from the market.
As a consultant, I see too many Kiwi companies experiencing (often avoidable) regulatory difficulties. Regulatory changes for companies have significant impacts in several areas that directly affect ROI and company valuation. Tackling complex regulatory environments requires a multidisciplinary team approach. My hope is that readers will find the following insights not only a ‘value-add’ to achieving timely market access but will also reduce overall risk (business, patient and regulatory), cost (start-up and running) and …. your stress levels!
High performing startups are ones who know how to utilise their resources. For founders who have not built or sold before, and need their startup to be an attractive acquisition or IPO opportunity in a few years, enlisting a capable Board is paramount to success.
The Board plays a transformational role in the development and growth of startups and in turn, the future of NZ’s healthtech economy. An integral role of the startup Board is to navigate the journey from startup to scaleup. A Board with the right expertise brings in-depth ‘know-how’ and a fresh perspective to founders and CEOs.
Having a Board member with commercial healthtech regulatory experience can strategically introduce standards and expectations early in the lifecycle of a company that can help it evolve as it rapidly grows. Knowledgeable Board members with regulatory expertise will deliver not only experience (and wisdom), but also expanded networks to support broader objectives.
It is not unusual for the CEO or founder of a startup to have a technical, scientific or medical background. At the early stage, traditional models allocate resources to formulate plans for regulatory approval and certifications, clinical studies/trials, as well as pricing and reimbursement. Regulatory ‘blind spots’, referred to earlier, are a common phenomenon. Value-add overheads such as patents, licenses and partnerships are more often than not prioritised over the set-up and implementation of regulatory requirements. Having a senior startup regulatory expert as a member of the leadership team, who knows the intricacies in the planning and roll-out phase, is vital to achieving timely market access.
If you need help finding your senior regulatory expert, please post to the RAPS (Regulatory Affairs Professionals Society) NZ platform. We are a network of NZ based regulatory professionals and are here to support you reach commercial success.
It is never too early to start building your regulatory strategy! Documenting this information arms you and the Board with ‘mission critical’ information that facilitates resource planning and management activities. It is also an essential document that is requested during a due diligence process (if M&A or commercial partnership is on your horizon).
Needs change as you advance along the R&D pathway that can impact your commercial outcomes and vice versa. For the regulatory strategy to be a ‘value-add’, integrate a culture of documentation (of all your processes and activities) from the company’s inception. And remember strategy is dynamic; review and revise often for ongoing value to be realised.
For financial reasons, startups often bounce between different software and web applications, or they continue to work on paper systems to manage documentation and processes. This fragmented approach increases the risk of errors and non‐compliance which can be costly in the form of delays such as the ability to commence clinical studies, as well market access, losses and withdrawals.
Make sure you assess the relevance and capability of your existing Quality Management System (QMS) so as to gain FDA and or standards compliance. A fully integrated and automated QMS will allow the business to minimize risks in the R&D phase, reduce time to market and ensure the safety and efficacy of your product.
1. Regulatory barriers prevent startups from accessing markets.
2. Innovative successful startups rely on regulatory experts.
3. Avoid common pitfalls by:
4. Early establishment of a regulatory strategy is critical to your success.
5. To bypass many obstacles, include plans to implement a ‘fit-for-purpose’ QMS.
6. A tried and proven QMS (that evolves with current standards) is a ‘must-have’ to provide your start-up the confidence to safely and effectively market a compliant product globally.